Romania: Economy slips into contraction in Q3 2025
GDP shrinks in the third quarter: A second release of national accounts confirmed that Romania’s GDP contracted 0.2% on a seasonally adjusted quarter-on-quarter basis in Q3, following 1.0% growth in the previous quarter. Q3’s reading marked the first contraction in over a year.
In annual terms, economic growth accelerated to 1.4% in Q3, following a 2.2% expansion in the prior quarter.
Fiscal consolidation and high inflation weigh on Q3 print: Relative to the previous quarter’s data, figures in Q3 worsened for private consumption (-0.4% in seasonally adjusted quarter-on-quarter terms vs 0.0% in Q2), government consumption (+3.3% vs +6.0% in Q2), exports of goods and services (-0.5% vs +1.3% in Q2) and imports of goods and services (-0.3% vs +0.3% in Q2). In contrast, the reading for fixed investment improved in Q3 (+4.0% vs -2.6% in Q2).
Private consumption growth likely suffered due to a sharp rise in inflation. Moreover, government spending lost steam amid fiscal consolidation efforts. Finally, exports of goods and services took a hit in Q3, as the U.S. implemented a 15% tariff on EU goods in August and the front-loading of purchases fizzled out.
GDP growth to accelerate in 2026: Our Consensus is for a second consecutive sequential contraction in Q4, after which the economy is expected to return to growth next year. In 2026 as a whole, Romania’s economy is set to pick up from 2025’s weak result, while remaining well below the past-decade average. Stronger domestic demand will buttress the acceleration as lower inflation and interest rates aid private spending and fixed investment. Moreover, government spending should rebound next year, but growth will remain subdued as austerity carries over. Less positively, export growth is set to moderate as higher U.S. tariffs cap momentum. The suspension of EU recovery funds as a result of a large fiscal deficit poses a downside risk, while renewed economic momentum in Germany—Romania’s top trading partner—poses an upside risk.
Panelist insight: Commenting on Romania’s economic outlook, Esrte Bank economists commented:
“In sum, Romania’s economy enters 2026 like a long-distance runner cresting a difficult hill: slowed by fiscal weights, jolted by supply-side headwinds, and still catching its breath after a politically turbulent lap. Growth is subdued, inflation only now preparing to decelerate, and fiscal policy tightening the shoelaces that had long been left untied. Yet the path ahead is not without promise. With investment poised to take the lead and policy credibility gradually restored, the runner remains very much in the race – leaning forward, regaining rhythm, and hoping that the next stretch offers more downhill than up.”